Europe's second-largest oil group by market capitalization said its cashflow would be 50 percent higher by 2014 and it could restart a program of share buybacks and from next year begin to pay investors higher dividends.
We expect to review our 2012 distribution plans in February, adjusting them in line with the improving circumstances of the firm, BP said in a statement.
BP's shares were up 3.9 percent at 455 pence at 0810 GMT (4:10 a.m. EDT), outperforming a 1.3 percent rise in the STOXX Europe 600 oil and gas sector index <.SXEP>.
However, some analysts said the cashflow target was not as impressive as it sounded.
The 2011 base in this target is heavily impacted by (Gulf of Mexico Macondo well) spill costs and the Macondo trust fund payments; stripping this out the cash flow growth target to 2014 actually looks broadly flat, analysts at Citigroup said in a research note.
Chief Executive Bob Dudley said the group would sell another $10 billion worth of oil and gas fields, lifting the value of its asset sell-off plan in the wake of the Gulf of Mexico disaster to $45 billion, and would recycle the cash proceeds into higher margin assets.
He added that a wide program of overhauls to improve safety at BP's facilities had also been completed, ending another dampener on production.
October 2011 ... marked a turning point in the company's oil and gas output, BP said in a statement.
Third-quarter production was down 12 percent on a year ago at 3.319 million barrels of oil equivalent a day, with underlying like-for-like output down 8 percent.
Lower production was the main reason behind a 4 percent drop in underlying profits for the quarter, which the London-based company also announced on Tuesday.
BP said it made a replacement cost (RC) net profit of $5.14 billion, up from $1.85 billion in the same period last year when the group took a large charge related to the oil spill.
Stripping out such one-offs, the result was $5.33 billion, ahead of an average forecast of $5.03 billion given in a Reuters poll of nine analysts.
The company's share price has languished for a year and some disgruntled shareholders have called for a breakup of the whole group - selling BP's half-share of Russia's third largest oil producer, TNK-BP
BP ruled out this suggestion, saying it was committed to its large, integrated business model.
Big Oil isn't dead yet, a spokesman said.
RC profit strips out unrealized gains and losses related to changes in the value of fuel inventories, and, as such, is comparable with net income under U.S. accounting rules.
(Editing by Greg Mahlich)